#1
Which of the following is a type of bank account that typically offers higher interest rates than a traditional savings account?
Money market account
ExplanationHigher interest rates than traditional savings accounts.
#2
What does APR stand for in the context of banking and loans?
Annual Percentage Rate
ExplanationMeasurement of loan cost.
#3
Which of the following is NOT a factor to consider when selecting a credit card?
Interest rate on savings
ExplanationIrrelevant factor in credit card selection.
#4
What is the purpose of a FICO score in personal finance?
To measure an individual's risk of defaulting on a loan
ExplanationRisk assessment for loan default.
#5
What is the purpose of a savings account?
To easily access funds for everyday expenses
ExplanationConvenient fund accessibility for daily needs.
#6
What is the penalty for exceeding the annual contribution limit for an Individual Retirement Account (IRA)?
10% penalty on the excess contribution
ExplanationFine for surpassing annual IRA limit.
#7
What is the primary purpose of a budget?
To allocate income
ExplanationIncome allocation management.
#8
What is the main advantage of diversifying your investment portfolio?
Lower risk
ExplanationRisk reduction through investment variety.
#9
What is the term for the process of transferring funds from one bank account to another electronically?
Wire transfer
ExplanationElectronic fund transfer between accounts.
#10
What does the acronym IRA stand for in the context of personal finance?
Individual Retirement Account
ExplanationRetirement savings account abbreviation.
#11
Which of the following is NOT typically considered a form of credit?
Savings accounts
ExplanationNon-credit related financial instrument.
#12
What is the primary function of the Federal Deposit Insurance Corporation (FDIC)?
Insure deposits in banks up to a certain limit
ExplanationBank deposit insurance up to limit.
#13
What does the term 'liquidity' refer to in the context of personal finance?
The ability to convert assets into cash quickly without significant loss of value
ExplanationSpeed of asset conversion without loss.
#14
Which of the following is a characteristic of a Roth IRA?
Withdrawals are tax-free in retirement
ExplanationTax-free withdrawals during retirement.
#15
What does the term 'compound interest' refer to?
Interest calculated on the initial investment plus any interest earned
ExplanationInterest on interest over time.
#16
What does the term 'asset allocation' refer to in investment?
The mix of different asset classes in an investment portfolio
ExplanationDiversification of investment types.
#17
Which of the following is a characteristic of a traditional IRA?
Contributions are tax-deductible
ExplanationTax deduction on IRA contributions.